Irvine Investment Firm, Owners Fined
An inactive Irvine company and its two former operators have agreed to pay $85,000 in penalties to settle a lawsuit by federal regulators that accused them of fraudulently selling $19 million worth of unregistered promissory notes.
Boston Acceptance Corp., known as First Lenders Indemnity Co., and its operators, James A. Cunningham of Costa Mesa, and Jonathan P. Boston of Newport Beach, didn’t admit liability in settling the case, which was filed Thursday.
For the record:
12:00 a.m. Sept. 21, 1996 For the Record
Los Angeles Times Saturday September 21, 1996 Orange County Edition Business Part D Page 2 Financial Desk 2 inches; 46 words Type of Material: Correction
Boston Acceptance Corp.--The Irvine company doing business as First Lenders Indemnity Co. was incorrectly characterized in a story Friday. The company has remained active and under the direction of its operators. The principals, who live in Orange County, also operate an affiliate, First Lenders Indemnity, in Florida.
The Securities and Exchange Commission wasn’t able to pinpoint any losses from the sale of the unregistered securities, said James A. Howell, a staff trial lawyer. “This is one of the fortunate cases where we caught it early,” he said.
Under the settlement, First Lenders agreed to pay $25,000 in civil penalties. Boston, formerly known as John R. Marsella, agreed to pay $50,000, and Cunningham agreed to pay $10,000.
The SEC alleged that Boston, 55, and Cunningham, 39, failed to register the notes they sold nationwide from April 1993 to December 1994. The agency also accused them of issuing prospectuses that, among other things, misled investors about fees Boston received and failed to disclose that Boston had been convicted of bank fraud in 1986. He served nine months in prison.
Neither could be reached for comment Thursday. Howell said they had moved to Florida.
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